1
Pakistan Economic and Social Review
Volume 47, No. 1 (Summer 2009), pp. 1-17
REDISTRIBUTIVE EFFECT OF PERSONAL
INCOME TAXATION IN PAKISTAN
VAQAR AHMED and CATHAL O’DONOGHUE*
Abstract. This paper studies the redistribution effect of personal income tax in
Pakistan. We decompose the overall tax system in order to evaluate the
contribution of rate, allowances, deductions, exemptions and credits. The
structure given in Income Tax Ordinance, 2001, is applied to gross household
incomes in 2002 (low growth year) and 2005 (high growth year). Our findings
reveal that the reforms laid down in this Ordinance resulted in a greater
redistribution of incomes. The redistributive effect increases as we move from
2002 to 2005 tax assessment. Deductions for salaried tax payers contribute the
most towards progressivity. This is different from countries with advanced
taxation systems relying mainly on allowances followed by tax rate and
exemptions.
I. INTRODUCTION
Personal income taxation is amongst the oldest and one of the commonly
used instruments of fiscal policy. Besides partly fulfilling the government
expenditure needs, income tax is also aimed at reducing the inequality gap in
the society. They are transformed in to progressive structures so that
principles of fairness are fully accomplished. Setting a just tax base is of
*The authors are, respectively, affiliated with Planning Commission of Pakistan and
National University of Ireland, Galway (e-mail: vahmed@gmail.com); and Teagasc-Irish
Agriculture and Food Development Authority and National University of Ireland, Galway.
The usual disclaimer applies.
The authors would like to acknowledge the comments received at the Annual Conference on
Contemporary Issues in Development Economics, held at Jadavpur University, Kolkata
(India), December 2008.
2
Pakistan Economic and Social Review
critical importance in order to observe the ability-to-pay principle. The extent
of redistribution in a tax system is not necessarily a static concept. Time
period over which we measure income and wealth are likely to influence the
measures of redistribution and progressivity (Creedy 1999).
The declining role of personal income taxes in developing countries is
certainly not a new phenomenon. Most developing economies have inelastic
tax structures with a narrow tax base, and high collection/administrative
costs. Hence in many cases these taxes are easy to evade (Avi-Yonah et al.,
2006; Bird et al., 2005). However the overall role of personal income
taxation cannot be completely discarded. This is because apart from the
distributional impact of these taxes, there are incentive effects as well, which
can for example impact the tax payer’s decision and manner of participating
in the labour market (Blundell et al., 2000).
In this paper we try to evaluate the progressivity in Pakistan’s income
tax structure using data from Household Income and Expenditure Survey
2001-02. We see the impact of Income Tax Ordinance for two separate
years; 2002 (low growth year), and 2005 (high growth year). There is some
previous research on the evaluation of tax progressivity in Pakistan. For
example, see Ilyas (2004), Alauddin et al. (1981), Ahmed et al. (1986),
Azfar (1972), Jeetun (1978), Malik et al. (1985, 1989). However, to our
knowledge there is no decomposition analysis of personal income tax
system. In the developing countries, this area of research has in the past
received less importance, given that income tax constitutes relatively smaller
portion of the overall revenue collections. See Sicat et al. (1988), Bird and
Zolt (2005, 2008), Bird (2008) and Bernardi et al. (2006).
The next section briefly describes the personal income tax reform in
Pakistan. Section III focuses on data and methodological issues and section
IV then describes the components contributing to the progressivity of the tax
system.
II. PERSONAL INCOME TAX STRUCTURE IN PAKISTAN
In 1947, immediately after independence, Pakistan adopted the Income Tax
Act 1922 of the pre-partition sub-continent. This Act was in fact introduced
by the British in this region, who had a version called the general income tax
introduced through Income Tax Act 1860. The Act of 1922 was based on the
recommendations of All India Income Tax Committee which had been given
the task of studying the income tax collections since the introduction of first
general income tax in India. This general tax was only imposed for a period
of 5 years in order to compensate for the mutiny of 1875. However, after the
AHMED and O’DONOGHUE: Redistributive Effect of Personal Income Taxation
3
great famine of 1876, this tax was revived the next year. The Act II of 1886
then gave a scheme for income tax levy that continued in later reforms.
As the new forms of incomes emerged, Pakistan had to adopt a new set
of recommendations given by the then Central Board of Revenue1 in the
form of Income Tax Ordinance, 1979. The promulgation of this Ordinance
widened the tax net and expanded the tax base. For details see Khan (1984).
Similar need for revision was felt 21 years later when Income Tax
Ordinance, 2001 was introduced which is still in operation subject to annual
amendments through Finance Bill.
Under the present structure of income taxation, incomes are classified
into: (a) salary, (b) income from property, (c) income from business, (d)
capital gains, and (e) income from other sources. The salary category
encompasses: (a) wages and remuneration, including any fringe benefits in
money terms such as leave pay, commission, and gratuity/work condition
supplements. Deduction is allowed if salary constitutes more than 50 percent
of a person’s overall earnings. Zakat is deducted from the tax base. Zakat is a
mandatory tax on all Muslim citizens if they had any earnings during the
year. It is charged at 2.5 percent on income (and specified asset holdings).
See Zakat and Ushr Ordinance, 1980. Agricultural incomes have been
exempt from taxation. This exemption is also applicable to any rent from
agricultural land. However, more recently this type of exemption has become
a controversial issue and has been debated on various occasions in the lower
and upper houses of parliament.
Apart from the income tax there are four other types of direct taxes
namely: wealth tax, capital value tax, worker’s welfare fund, and corporate
assets tax. The main income tax parameters have been derived from the
Income Tax Ordinance, 2001. There are three different income categories
general income, salaried income and agriculture income, each having five
different bands where incomes are being taxed according to the prescribed
schedule.
The income to be taxed is computed as below:2
TY = Y – Z – WPF – WWF
Where TY is the taxable income, Y is total income from all heads of income,
Z is the Zakat payment by an individual, WPF is the amount paid towards
1
2
Now called: Federal Board of Revenue (FBR).
This definition is in line with the one given in Income Tax Ordinance, 2001-02, Central
Board of Revenue, Islamabad.
4
Pakistan Economic and Social Review
workers participation fund under Companies Profit (Workers’ Participation)
Act, 1968. WWF is the amount paid to Workers’ Welfare Fund under the
Workers’ Welfare Fund Ordinance, 1971.
In this paper, we will mainly analyze the personal income taxation as the
other forms of direct taxation are harder to simulate and at times lead to
excessive use of assumptions. Furthermore the other four types of direct
taxes yielded Rs. 7,123 million in the year 2000-01, which was 5.7 per cent
of the total collection from direct taxes (CBR Yearbook 2000-01).3 In the
2002 tax system, allowance is kept at Rs. 80,000 with progressive rates
applied until Rs. 700,000 after which the highest (slab) rate of 35 per cent is
applied.
As explained earlier agricultural incomes in Pakistan are exempt from
taxes. However if a person’s agriculture income exceeds Rs. 80,000 and the
person also has non-agriculture income then the tax rate will only apply to
non-agricultural income of a taxpayer.
A special tax credit of 50 per cent of the tax payable is allowed to an
individual if: (a) his age is 65 years or more on the first day of the relevant
tax year, and (b) his taxable income is up to Rs. 300,000.4 Other miscellaneous tax credits allowed by the government in the Ordinance include;
foreign tax credit, tax credit for donations, tax credit for investment in shares,
tax credit for payments towards retirement annuity scheme, and tax credit for
mark-up on loans for house.
A low tax base, failure to curb evasion and delay in bringing new forms
of incomes in the tax net, has resulted in an inelastic tax structure. These
issues although were part of the overall objectives of Income Tax Ordinance,
however, revenue collections have not been able to keep pace with the
growth milieu. Figure 1 shows how income tax collections have performed
vis-à-vis real GDP growth.
The income tax to GDP ratio remained stagnant between the years 2000
to 2006. However, during this time Pakistan witnessed one of the highest
GDP growth rates in its history (reaching up to 9% percent in 2005).
Between 2001 and 2005 the economic growth rate averaged 5.1 percent,
however the income tax to GDP ratio remained under 3.5 percent. The share
of income tax in total direct taxes and overall federal tax receipts also
declined from 95.8 to 93.2 percent and 33.8 to 29.4 percent respectively.
3
4
http://www.cbr.gov.pk/YearBook/2000-01/default.htm.
Clause [1A] of Part-III of Second Schedule in the Income Tax Ordinance.
AHMED and O’DONOGHUE: Redistributive Effect of Personal Income Taxation
5
FIGURE 1
GDP Growth and Income Tax
14
12
10
8
6
4
2
0
2000
2001
Total Revenue to GDP
2002
2003
Real GDP Growth
2004
2005
2006
Income Tax to GDP
III. METHODOLOGY AND DATA ISSUES
The starting point is the identification of tax related components that are used
while going from gross incomes (I) to net incomes (NI).5 We calculate the
tax free income (F), which in equation 1 is the sum of exemptions (E),
allowances (A) and deductions (D). Then taxable income (TI) is calculated in
equation 2 by subtracting tax free income from gross income.
F  A D+ E
1
TI  I  F
2
The residual income (R) is calculated in equation 3 by subtracting the
tax liability (T) from taxable income and final residual income (Rf) is
obtained in equation 4 by adding residual income with tax credits (C).
R  TI  T
3
Rf  R  C
4
If credits are subtracted from tax liability (in equation 5) we get final tax
liability (Tf), which if subtracted from gross income will give us the net
income (equation 6).
5
For ease of reference notations are the same as used in Pfähler (1990).
6
Pakistan Economic and Social Review
Tf  T  C
5
NI  I  T f
6
The progressivity of tax liability can be expressed as the sum of four
items namely rate effect, allowance effect, deductions effect, and tax credits
effect. This is formalised below:6
 NK 
t  K


c

R 
 AK 
 DK  
 CK

t c 
1  
1 
t

c

7
Where  NK is Kakwani index of progressivity, t is average (gross) tax rate, c
is average credit rate,  CK measures regressivity of credits,  RK gives the
progressivity of rate,  AK measures regressiveness of allowances,  DK gives
progressivity of deductions,  and  indicate average allowance rate and
average deduction rate respectively. This decomposition method developed
in Pfähler (1990) is used in Decoster et al. (2002) and Wagstaff et al. (2001).
Our main data source is Pakistan’s Household Income and Expenditure
Survey (HIES) 2001-02. The survey description shows that a total of 16400
households were interviewed. The sample of household was drawn from
1150 primary sampling units out of which 500 are urban and 650 are rural.
The data in survey only provided details on net incomes. This posed a
challenge for our analysis as we required gross incomes which can be
subjected to tax rules. Hence to obtain the net incomes we used the net-togross algorithm in XLsim microsimulation model for Pakistan (O’ Donoghue
and Ahmed 2004). This algorithm is explained at length in Immervoll and O’
Donoghue (2001).
XLsim is a generic program designed to analyse tax-benefit policies and
reforms. Due to the recent enormous growth in this field, tax-benefit
microsimulation models are being developed in various languages such as C,
Visual Basic, Gauss and SAS. However our inclination towards using XLsim
is due to its user friendly excel-VB environment. The idea behind the actual
design of XLsim came about as a need to demystify the large scale and
heavily coded microsimulation systems. To construct a model using Gauss,
for example would require considerable skill in programming and
debugging. However for the case of XLsim, one requires intermediate level
proficiency in MS-Excel to construct and run the model. The Xlsim model
6
For ease of reference the notations are the same as used in Wagstaff et al. (2001).
AHMED and O’DONOGHUE: Redistributive Effect of Personal Income Taxation
7
uses the household data and applies the taxation rules to individual gross
incomes. The calculations are produced both at the family and household
level, and the difference in the disposable income between the two runs is the
net effect of the reform. For a review of microsimulation models see
Klevmarken (1997) and O’Donoghue (2001). For country-specific
applications see Lloyds (2003) and Wagenhals (2004).
A brief explanation is required here to highlight the tax-related
definitions as used in our analysis and exhibited in Figure 2. We have treated
allowance as that limit of income which is not taxed. Deduction is in fact
reduction in tax liability allowed for salary earners. Exemptions include
incomes from agricultural activities and credit includes the special provisions
stated in Ordinance/tax rules (explained in section 2), Zakat, and Sadaqat.7
Data on effective payment of Zakat at the household level does not match the
amount assessed in FBR records. Hence, for accounting purpose we have
treated Zakat as a component that directly reduces the amount of income tax
paid. The assumption over here is that a tax payer essentially reduces his
payable amount by showing the Zakat accrued to him, however we are not
certain from the FBR data if the Zakat payment was in fact made.
FIGURE 2
Tax System for the Year 2002
180000
Amount of Tax Liability/Allowances
160000
140000
120000
100000
80000
60000
40000
20000
0
80000
150000
300000
400000
700000
Taxable Income
Allowances
7
Charity money.
Zakat
Tax Liability (General)
Deduction
800000
8
Pakistan Economic and Social Review
The tax system in 2002 and 2005 remained almost the same except for
the change in allowance.8 In Figure 3 we can see that the tax liability starts
from Rs. 100,000 instead of Rs. 80,000 (in 2002). We can also observe the
deduction component in the tax system where the liability of those tax
payers, whose salary constitutes more than 50 percent of total income earned,
is lesser than the general tax payers.
FIGURE 3
General Vs. Salary Tax Burden 2005
180
160
Amount of Tax (Rs '000)
140
120
100
80
60
40
20
0
100
150
300
400
700
800
Taxable Income ('000)
General Tax
Tax on Salary
While going from 2002 to 2005 tax system we also uprate the incomerelated characteristics in the 2001-02 household survey. Adjustments to
various income components are made in order to accurately project the
changes in incomes between 2002 and 2005. Separate uprating factors can be
applied for various income sources such as; wage income, self-employment
income, rental income, and pensions. This method has been explained in
Stirling and Lazutka (2006). The obvious advantage of this method is that
changes in incomes are applied at disaggregate income levels. This to some
extent preserves the heterogeneity of the survey observations.
8
There is also minor change in the manner of allowing deduction for salaried class.
AHMED and O’DONOGHUE: Redistributive Effect of Personal Income Taxation
9
IV. RESULTS – DISTRIBUTIONAL IMPACT
OF THE TAX SYSTEM
The overall personal income tax structure in Table 1 seems progressive for
2002 system (shown by a positive Kakwani) and redistributive (shown by a
negative Reynolds-Smolensky). Applying the 2005 rates to the household
incomes for the year 2002, we see an increase in progressivity, and if 2005
rates are applied to uprated incomes, then the results indicate a reduction in
progressivity of about 1 percent (from 0.547 to 0.542). However, uprated
2005 system seems more redistributive as shown by the decline in R-S. The
percentage change of Gini coefficient for net income over gross incomes
shows a 3.7 percent decline compared to 3.2 in 2002 system (Table 2). This
is also an indicator of over time redistribution of the Income Tax Ordinance,
which is revised every year (through a Finance Bill) keeping in view the
changes in incomes.
The low values of Reynolds-Smolensky (R-S) seem plausible as there is
inequal redistribution shown by tax base and rate structure (Table 1). Only
allowances and deductions have been responsible for contributing towards
redistribution in overall personal income tax system. The role played by
allowances and deductions also seems to be slightly declining overtime.
Progressivity in both tax rate and base is declining over time.9 This is seen in
the overtime reduction in value of Kakwani for all sub-components namely;
allowances, deduction, exemptions and credits. The highest change is in
Kakwani measure for allowance falling by 2 percent (from 0.501 to 0.491).
A closer look reveals that the progressivity pattern of tax base and allowance
remained identical.
If one is to focus on only the role played by income tax reforms in
reducing income inequality then we can observe in Table 2, first column,
where the Gini coefficient of post-tax income declines by 3.2 percent as
compared to pre-tax income. We can see the dominance of 2005 system over
2002 in terms of change in (greater) redistribution. The former shows a
greater decline in all inequality indicators.
Generalised Entropy (GE) indicators are used in order to assess
sensitivity towards inequality across the income distribution. GE measures
satisfy five axioms which are desirable for a measure of inequality namely;
9
However, if the incomes are not uprated and 2005 system is applied to 2002 incomes then
there is increase is progressivity.
10
Pakistan Economic and Social Review
TABLE 1
Decomposing Personal Income Tax System
Tax Components
Overall Income Tax
2002
2005
2005_u*
Tax Rate Structure
2002
2005
2005_u
Tax Base Structure
2002
2005
2005_u
Allowance
2002
2005
2005_u
Deduction
2002
2005
2005_u
Tax Credits
2002
2005
2005_u
Exemptions
2002
2005
2005_u
Kakwani
ReynoldsSmolensky
0.547
0.564
0.542
–0.012
–0.011
–0.015
0.602
0.621
0.595
0.018
0.015
0.021
0.502
0.532
0.492
0.140
0.115
0.132
0.501
0.531
0.491
–0.121
–0.105
–0.117
0.621
0.640
0.613
–0.005
–0.002
–0.003
0.588
0.617
0.586
0.005
0.004
0.006
0.590
0.591
0.577
0.026
0.025
0.028
*2005_u: 2005 tax system with incomes uprated from 2002 household data.
AHMED and O’DONOGHUE: Redistributive Effect of Personal Income Taxation
11
the transfer principle, scale independence, population independence
anonymity and decomposability. GE ranges from zero (complete inequality)
to infinity (see Cowell, 1995). An increase in GE parameter implies less
sensitivity towards inequality at the lower end of the distribution. GE(0) is
the mean log deviation, giving higher weight to income differences at the
lower end of distribution. GE(1) is Theil index of inequality that gives equal
weight to the entire income distribution. GE(2) is one half the squared
coefficient of variations and gives more weight at the upper end. We can
observe in Table 2 that the highest change (while comparing pre and post tax
incomes) is in the case of GE(2). This is because the upper tail of income
distribution is most affected by the imposition of a progressive personal
income tax and income earners falling in this upper tail end up paying a
higher marginal rate.
TABLE 2
Percentage Change in Net Income Over Gross Income
2002_n/g
2005_u_n/g
Gini
–3.2
–3.7
GE(1)
–7.9
–9.6
GE(0)
–5.4
–6.4
GE(2)
–12.1
–15.0
*n/g: Percentage change in net income over gross income.
2005_u: 2005 tax system with incomes uprated from 2002 data.
Table 3 exhibits the percentage contribution of various tax components
(towards progressivity) under each of the three systems. The clearly stagnant
contributions are observable between the 4 years (2002 to 2005). The
percentage contribution of rate effect, allowances and deductions remains
constant. The contribution of exemptions slightly decreases, while that of
credits increase. The later’s increase is plausible given that the increase in
Zakat payable is directly related to increase in pre-tax incomes. Recall from
previous section that for the purpose of tax accounting in household data we
have treated Zakat payment as a tax credit.
12
Pakistan Economic and Social Review
TABLE 3
Percentage Contribution Towards Progressivity
Tax Components
2002
2005
2005_u
Rate effect
20.8
20.7
20.8
Allowance
17.3
17.7
17.2
Deductions
21.4
21.3
21.4
Exemptions
20.3
19.7
20.2
Credits
20.3
20.6
20.5
Total
100
100
100
*2005_u: 2005 tax system with incomes uprated from 2002 data.
How do the component-wise contributions in Pakistan compare with
other countries? We try to see from Verbist (2004) and Urban (2006) the
percentage contribution towards progressivity in other developed and
transition economies. Selected countries are grouped in Table 4. In this
cross-country comparison we can observe that in pursuit of progressivity,
countries with advanced taxation systems rely on allowances followed by
rate and exemptions. Pakistan being a low-income country having a much
narrower tax base relies on deductions followed by rate and exemptions.
Recall that deduction here represents reduction in tax liability allowed for
salary earners.
TABLE 4
Cross-Country Comparison: Percentage Contribution Towards Progressivity
Exemptions
Deductions
Allowances
Rate
Credits
Overall
R-S
Austria
16.8
0.5
0.1
47.3
35.3
100
0.061
Ireland
34.5
–2.5
31.2
38.7
–1.9
100
0.055
Netherlands
8.1
–4.5
25.1
71.3
–
100
0.046
UK
55
–2.4
30.7
14.4
2.3
100
0.046
Croatia
–
–
85.8
14.3
–0.2
100
0.031
Pakistan
20.3
21.4
17.3
20.8
20.3
100
0.012
Countries
Source: For first four countries; Verbist (2004). For Croatia; Ivica Urban (2006).
For Pakistan: Author's own calculation.
AHMED and O’DONOGHUE: Redistributive Effect of Personal Income Taxation
13
Table 5 gives a comparison of post tax incomes for 2002 and 2005. The
Gini coefficient for 2005 post tax uprated incomes increased by 1.4 percent
compared to 2002. Even if the incomes are not uprated for 2005, still there is
an increase of 0.18 percent in inequality. This implies that overtime changes
in the tax system (resulting in higher redistribution from 2002 to 2005) are
unable to reduce the already unequal pre-tax income gap. The rise in incomes
around 2005 has favoured the higher income groups resulting in an increase
in Gini coefficient.
TABLE 5
Percentage Change in Inequality Measures for 2005 over 2002
2005/2002
0.18
0.28
0.28
0.23
Gini
GE(1)
GE(0)
GE(2)
2005_u/2002
1.4
3.2
3.4
4.3
*2005_u: 2005 tax system with incomes uprated from 2002 data.
V. CONCLUSION
Pakistan like other developing economies has a narrow tax base with high
enforcement costs, making personal income taxation an unlikely cornerstone
of a comprehensive inequality reduction agenda. However its role cannot be
completely written-off given the potential contribution towards efficiency
and equity objectives at the national level.
Our main findings are:
10
●
Income Tax Ordinance resulted in greater redistribution. The
redistributive effect increases as we move from 2002 to 2005 tax
assessment.
●
Deductions for salaried tax payers contribute the most towards
progressivity. This is different from countries with advanced
taxation systems relying mainly on allowances followed by tax rate
and exemptions.
●
Given the increasing pre-tax income gap, reforms in taxation cannot
be entirely relied upon for a reduction in inequality in the society.10
The need for social protection policies and social safety nets remains.
14
Pakistan Economic and Social Review
●
Progressivity pattern of tax base and allowance is identical.
There is a need to reform the present structure of exemptions. Income
from agriculture (almost a quarter of GDP) is exempt from taxation.
Agriculture taxation in Pakistan has been a matter of both parliamentary
controversy and bureaucratic contention. For a very long time the presence
of a dominant feudal class in the parliament implied that no headway could
be made in this direction. However, on the insistence and continuous
pressure from the multilateral donors and agencies a plan was chalked out to
levy the tax on agriculture incomes subject to a consensus on a suitable tax
base. However the actual imposition of such a tax is still not clearly defined
to serve the macroeconomic purpose of broad basing the tax base and the
microeconomic purpose of decreasing income inequalities (see World Bank,
1999; Chaudhry, 2001). The tax office has been unclear as to what will be a
better instrument for agriculture taxation, i.e. should the tax be levied on
agricultural produce, land value, value of agriculture inputs, value of output
sold etc. In order to increase the tax to GDP ratio, indirect tax will remain the
primary instrument in the medium term. There is a need to further study the
distributional impact of bringing new services in to the tax net. The existing
structure of sales tax also has the potential of being made a progressive tax.
These issues require further research.
AHMED and O’DONOGHUE: Redistributive Effect of Personal Income Taxation
15
REFERENCES
Ahmed, E. and N. Stern (1986), Tax reform for Pakistan: Overview and
effective taxes for 1975-76. The Pakistan Development Review, Volume
25(1), pp. 43-72.
Alauddin, Talat and Biquees Raza (1981), Tax Progressivity in Pakistan.
Pakistan Institute of Development Economics, Research Report Series
No. 133.
Avi-Yonah, R. and Y. Margalioth (2006), Taxation in developing countries:
Some recent support and challenges to the conventional view. Virginia
Tax Review, Summer 2007.
Azfar, Jawaid (1972), The income distribution in Pakistan, before and after
taxes 1966-67. Unpublished doctoral thesis.
Bernardi, Luigi, Luca Gandullia and Laura Fumagalli (2006), Tax Systems
and Tax Reforms in South and East Asia: Overview of Tax Systems and
main policy issues. In Bernardi, L., A. Fraschini and P. Shome (eds.),
Tax Systems and Tax Reforms in South and East Asia. London:
Routledge, pp. 3-35.
Bird, R. M. (2008), Tax challenges facing developing countries. National
Institute of Public Finance and Policy Working Paper 2008.
Bird, R. M. and Eric M. Zolt (2005), The limited role of personal income tax
in developing countries. Journal of Asian Economics, Volume 16, pp.
928-946.
Bird, R. M. and Eric M. Zolt (2008), Tax policy in emerging countries.
Environment and Planning C: Government and Policy, Volume 26, Issue
1, pp. 73-86.
Blundell, R., A. Duncan, J. McCrae and C. Meghir (2000), Labour Market
Impact of Working Families’ Tax Credit. Fiscal Studies, Volume 21,
No. 1, pp. 75-104.
Chaudhry, M. G. (2001), Theory of Optimal Taxation and Current Tax
Policy in Pakistan’s Agriculture. The Pakistan Development Review,
Volume 40(4), Part II, pp. 489-502.
Cowell, F. A. (1995), Measuring Inequality, Second edition. Harvester
Wheatsheaf, Hemel Hempstead.
16
Pakistan Economic and Social Review
Creedy, John (1999), Taxation, Redistribution and Progressivity: An
Introduction. The Australian Economic Review, Volume 32, No. 4, pp.
410-422.
Decoster, André, Isabelle Standaert, Christian Valenduc and Guy Van Camp
(2002), What Makes Personal Income Taxes Progressive? The Case of
Belgium. Brussels Economic Review/Cahiers Economiques de
Bruxelles, Editions du DULBEA, Université libre de Bruxelles,
Department of Applied Economics (DULBEA), Volume 45(3), pp. 91112.
Ilyas, M. (2004), Distributive effects of government expenditures and taxes:
A case study of Pakistan. Doctoral dissertation, International Islamic
University, Islamabad.
Immervoll, H. and C. O'Donoghue (2001), Imputation of Gross Amounts
from Net Incomes in Household Surveys: An Application using
EUROMOD. EUROMOD Working Papers em1/01, EUROMOD at the
Institute for Social and Economic Research.
Jeetun, Azad (1978), The incidence of taxes in Pakistan. Distributional
paper, Applied Economics Research Centre, University of Karachi.
Khan, R. A. (1984), Introduction to the Taxation System of Pakistan. Book
Traders, Lahore (Pakistan).
Klevmarken, N. A. (1997), Behavioral Modeling in Micro Simulation
Models. A Survey. Uppsala University, Department of Economics,
Working Paper Series 1997:31.
Lloyd, R. (2003), Use of Static Microsimulation Models in the Policy
Process in Australia. Paper presented to Modelling our Future:
International Microsimulation Conference on Population Aging and
Health.
Malik, M. H. and N. Saqib (1985), Who bears the federal taxes in Pakistan.
The Pakistan Development Review, Volume 24, No. 3&4 (AutumnWinter).
Malik, M. H. and N. Saqib (1989), Tax incidence of income class in
Pakistan. The Pakistan Development Review, Volume 28, No. 1
(Spring), pp. 13-26.
O’Donoghue, C. (2001), Dynamic Microsimulation: A Methodological
Survey. Brazilian Electronic Journal of Economics, Volume 4(2).
AHMED and O’DONOGHUE: Redistributive Effect of Personal Income Taxation
17
O’Donoghue, C. and V. Ahmed (2008), Xlsim: Tax-Benefit Microsimulation
Model. Working Paper, National University of Ireland, Galway 2004.
Pfähler, Wilhelm (1990), Redistributive effect of income taxation:
decomposing tax base and tax rates effects. Bulletin of Economic
Research, Volume 42(2), pp. 121-129.
Sicat, Gerardo P. and Arvind Virmani (1988), Personal Income Taxes in
Developing Countries. World Bank Economic Review, Volume 2, Issue
1, pp. 123-38.
Stirling, T. and R. Lazutka (2006), I-CUE Feasibility Study: Lithuania 2005
Tax-Benefit System. EUROMOD Study, Institute of Social and
Economic
Research,
2006.
http://www.euro.centre.org/data/
1163686277_6287.pdf .
Urban, Ivica (2006), What makes the personal income tax in Croatia
progressive? Occasional publication of the Institute of Public Finance,
Croatia.
Verbist, G. (2004), Redistributive effect and progressivity of taxes: An
international comparison across the EU using EUROMOD. EUROMOD
Working Paper EM5/04, October 2004.
Wagenhals, G. (2004), Tax-Benefit Microsimulation Models for Germany: A
Survey.
Discussion
Paper
No.
235/2004,
Institut
für
Volkswirtschaftslehre, University of Hohenheim.
Wagstaff, A. and E. Van Doorslaer (2001), What makes the personal income
tax progressive? A comparative analysis of fifteen OECD countries.
International Tax and Public Finance, Volume 8, pp. 299-315.
World Bank (1999), Agricultural Taxation in Pakistan. Washington, D. C.:
World Bank Report No. 18935-Pak 1999.